Hunting Alligators In Las Vegas

I was going to a cocktail party at the Playboy Club, in the Palms hotel in Las Vegas.That’s pretty much all I knew. It was at the Palms.

Ordinarily, I might not object to being invited to the Playboy Club.

I was even a bit intrigued to learn there still exists such thing as the Playboy Club. It seems almost quaint.

But I suspected the Playboy club would not be the ideal place for a reporter to source stories about hedge funds. Who wants to talk to a guy from CNBC taking notes on his iPhone while scantly clad Playboy bunnies are running around?

To get to the cocktail party I had to navigate a dark hallway that led to an elevator bank with a neon purple Playboy bunny over it. A huge bouncer stood in front of the elevators.

“Can I help you?”

The way he said it, I thought he really meant “hurt” instead of help.

I explained that I was here for a party organised by a fund of funds.

Improbably, this worked. A giant arm swung out and a finger the size of an Italian sausage pressed the elevator button.

As it turned out, the cocktail party took place several floors below the Playboy Club.

“I was told there’d be alligators here,” a guy with a large glass of red wine said.

He’d recently started a hedge fund, he explained. Things were going well. But he needed more alligators.

My mind raced. Earlier in the evening SAC Capital founder Steve Cohen had quoted his father as saying that a “shoemaker makes shoes.” Could the young hedge funders be taking that advice literally and turning to making alligator shoes?

But Las Vegas is in a desert. It seems like an unlikely place to find alligators.

Then again, Las Vegas is a place where lots of unlikely things are found.

“Alligators?”

The hedge fund manager laughed out loud.

“Allocators. Guys charged with allocating funds for institutions, family funds, pensions,” he said.

He explained that for a newly launched hedge fund, networking with the allocators was absolutely crucial. Without allocators, building enough capital to make a hedge fund really work could be extremely difficult.

Every young hedge fund guy at SALT is hoping to hit it off with allocators.

Once you catch an allocator, you have to be prepared with “the ask”—your pitch and your straight-out shameless request for funding.